The Entry of Multinational Companies to the Base of the Pyramid: A Network Perspective

Misagh Tasavori · Pervez Nasim Ghauri · Reza Zaefarian

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Innovation and Socioeconomic Development International Business and FDI Innovation and Knowledge Management

Abstract

One of the markets that has attracted the attention of business leaders and consequently international business researchers in recent years is the base of the economic pyramid (BOP) (Hammond and Prahalad, 2004; Hart and Christensen, 2002; Lodge, 2006; Lodge and Wilson, 2006; London and Hart, 2004; Prahalad, 2009; Prahalad and Hammond, 2002; Seelos andMair, 2007). This market, which comprises people with a daily income of less than $2 a day, has mainly been ignored by multinational corporations (MNCs) up until now (Hammond et al., 2007). However faced with saturated markets at the top of the economic pyramid, MNCs are increasingly diverting their attention to the BOP and developing strategies to enter this market and sell their products or services to this segment. Recent studies illustrate that corporations have to revise the way they do business in order to fit the specific characteristics of the BOP (London and Hart, 2010). One of the factors found to distinguish successful from unsuccessful MNCs in this market is the building of relationships with non-traditional partners such as non-governmental organizations (NGOs) (Teegen, Doh and Vachani, 2004). While the role of NGOs has been corroborated in several international business studies (Doh and Teegen, 2002; Parker, 2003; Teegen et al., 2004; Teegen, 2006), and specifically at the BOP (London and Hart, 2004; Prahalad, 2009), we still know very little about how NGOs help MNCs to enter the BOP (Perez-Aleman and Sandilands, 2008).

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